KC osteopathic school sues former president

Monday, March 22, 2010 | 4:57 p.m. CDT

KANSAS CITY — A Kansas City-based osteopathic medical school on Monday filed a lawsuit against its former president, accusing her of fraudulently receiving millions of dollars for personal trips and other lavish expenses that had nothing to do with university business.

Kansas City University of Medicine and Biosciences also claims in the lawsuit, filed in Jackson County Circuit Court, that president and chief executive officer Karen Pletz frequently lied to the Board of Trustees and created false minutes of meetings that were never held in order to pad her salary.

The school also claims that she had hundreds of thousands of dollars worth of university assets donated to nonprofit groups in her name "in order to promote her own agenda to be viewed as a leading philanthropist in Kansas City."

According to the lawsuit, she then claimed those contributions as deductions on her personal tax returns. She's accused of borrowing hundreds of thousands of dollars from subordinates to pay penalties, interest and taxes, once the IRS caught on.

"I think the word 'arrogance,' in my personal opinion, is a good one here," said H. Danny Weaver, acting president and CEO of the school.

Calls to Pletz and her attorney were not returned Monday afternoon.

The school alleges that Pletz spent more than $2.3 million of KCUMB assets for her activities, which "provided little or no benefit to KCUMB and the true purpose of a substantial majority of which was not disclosed to the Board of Trustees."

From 2005 through 2009, her total compensation was more than $1 million a year, school officials said, which was far more than what the school thought it was paying her.

The university formed a special committee last year to investigate Pletz after several people came forward with accusations against her.

Investigators uncovered signs of fraud going back more than a decade, according to the lawsuit, including more than 85 reimbursement claims — some of them running into the thousands of dollars — for dinners and alcohol in which the person or people listed on the expense report as her guests never attended.

She also took personal trips to places like Australia, Las Vegas and Fort Lauderdale, Fla., for which the school reimbursed her, the lawsuit alleges.

The committee estimated that 70 percent of the claims Pletz submitted for reimbursement were based on false or materially inaccurate information.

Two weeks after Pletz was fired on Dec. 18, executive vice president Doug Dalzell was terminated and chief financial officer Richard Hoffine resigned.

The lawsuit claims that Pletz's misconduct encouraged the misconduct of others in her office, including Dalzell and Hoffine.

"Based on what we've uncovered, it took more than Karen Pletz to bring this off," Weaver said.

Weaver said that after Pletz was fired, the university put several new policies in place to improve transparency and accountability of the president's office.

But while Pletz is accused of fleecing the school, Weaver acknowledged that the former president did some good things for the university.

"She improved the graduation rate of the university, and we've added some buildings on campus," he said. "Those are good things. And she's certainly brought alumni back to campus. But this behavior perpetuated by her certainly is not something the university can be proud of."

Weaver said the school has about 600 students on campus and a total of about 1,000 in its programs.



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